Elemental chemistry

Carbon is nature’s building block, but when it comes to small business, the Carbon Group is where owners turn for solid foundations. The company, started in 2014 by Nathan Hood and Jamie Davison, offers all the core services that small businesses need to efficiently run and grow — accounting and tax, bookkeeping, finance and lending, insurance broking, payroll, R&D and grants, and wealth management. 

When the two started working together after a chance meeting at a Business Network International breakfast meeting in 2013, they had no idea that Carbon Group would become the success story it is today. 

Over the past eight years, the number of Carbonites — stakeholders in the business — has been rising both through organic growth but also acquisitions and partnerships. That includes in FY21 partnership with Charter Partners, which has three Queensland offices in Brisbane, Gympie, and Bundaberg, as well as BNR Bookkeeping in the Gippsland region of Victoria. 

“Our vision was to build a firm that would help small businesses find holistic professional advice, and to create a model where partners weren’t remunerated by the performance of the whole group but by their client base,” Mr Hood says. 

“We wanted to give our partners ownership over their clients. We also wanted to bring together the core services an SME needs to succeed.” 

When the pair met at that breakfast meeting nine years ago, they were both feeling a little disillusioned with the services available to small businesses. 

“The industry was fragmented, and advisers didn’t talk or worked against each other. So, clients got confused and didn’t do anything as they were not sure which adviser was right,” Mr Davison says. 

“We wanted to create something where all advisers worked together in the background and weren’t there to score points or make things sound more complex than they need to be to push fees up.” 

Mr Hood says there are two key parts to every business: first, the forward-facing part, which is about the client experience and the staffing culture on the ground and in the local community. 

“And then there is the back-of-house part, which includes all the infrastructure around running the business including things like systems, marketing, IT, mentoring, finance function, capital, HR and reporting,” he says.  

“Carbon Group’s role in our partnerships is to run the back-of-house part of the business and empower our partners to run the forward-facing part of the business. This is the part that most partners actually got into partnership for in the first place but found themselves very quickly dropping the ball here because the noise from the back-of-house demanded all their attention.” 

The difference between Carbon Group and other financial services businesses is that it “walks the talk”, says Mr Davison. “We don’t give textbook responses. We are going through the same challenges our clients are, so can give real-world advice.”  

The two came at the problem facing small businesses from different angles.

Mr Davison came from a bookkeeping background. With three university degrees, he began his career with a bookkeeping business called Miss Efficiency which evolved into Fortuna Bravado, a successful bookkeeping firm he ran from home.

As a Certified Practising Accountant, Mr Davison had an advantage over other bookkeepers. He was an early adopter of cloud-based technology because he saw it offered bookkeepers the chance to be pivotal for business success. 

Mr Hood, on the other hand, went straight into the accounting sector after completing his tertiary qualifications as well as getting his CPA. At 23 he bought into a business, only to have the retiring partner take back all his clients 18 months later.

However, instead of conceding defeat Mr Hood took on the challenge of rebuilding into a firm that specialised in business structuring, growth and tax minimisation strategies, and advisory work.

“…Some of the things I did take away from that experience was that transactions are only as good as the people that are involved in them — culturally and ethically.

“I also discovered that documentation and clarity is important … and to also make sure you are doing something because of a passion, and not only for the financial side. When things get tough, it is the passion that gets you out the other end.” 

When Mr Davison and Mr Hood met at that BNI networking group, Mr Hood says they quickly noticed the strong client outcomes they achieved by referring and working together. 

“…The experience with these partners was not always great and could often be hit and miss, leaving clients’ needs [unsolved]. What we wanted to do was to grow a full-service solution for the SME market that was run by industry specialists across the board, rather than having a jack-of-all-trades sole trader or relying on external parties to deliver at the level you want.  

“Further to this, with the fragmented accounting industry we saw the opportunity to build out scale across Australia while still maintaining a very community focused local footprint.” 

Like any new partnership or venture the early days were spent learning each other’s strengths and weaknesses and figuring out how their vision could become a reality.

“We used to make an action list for the week and then race to see who could tick it off the quickest. We talked through so many different concepts from what businesses should fall under the Carbon umbrella and what shouldn’t, what our team (Carbonites) would experience, as well as completely far off concepts like what happens if someone wants to retire — and considering we were both 30, it was very odd concept to discuss.” 

Mr Hood agrees the pair thought big and ran hard. 

“There were very few weeks where any of the points on that list weren’t completed and typically additional ones were added mid-week that would strengthen the overall plans.” 

And like most start-ups, it wasn’t all smooth sailing. 

“We had a number of false starts,” Mr Davison says. “We partnered with people that were really gloried employees rather than entrepreneurs who wanted to start a business with us, and we also had a lot of trouble launching our additional services.” 

Their biggest setback, says Mr Hood, was trying to launch four new businesses in four separate industries in the first 12 months of launching Carbon.

“Needless to say, they all demanded lots of time, energy and worst of all, capital, all of which were in limited supply,” he says. “This put the core business under a lot of strain in the early days, which took several years to get back on track.”

However, the pair eventually attracted the right people and built scale and the brand.  

“We … brought in additional talent to take over the ‘time and resource’ demands of these businesses, but at the extra monetary cost.” 

With most of the bugs ironed out, Carbon Group began growing quickly. 

“We have expanded heavily through M&A and in the early days the biggest challenge was obtaining funding or the bank trying to slow us down,” Mr Davison says. “We don’t have those issues anymore. l know that we have proven ourselves.”  

Partnerships, especially those in a growing business, can often be fraught with disagreements and disappointments, but so far the pair seem to have found the right balance. 

“We are a good counter-balance to one another and generally if one of us is down the other is up,” Mr Davison says. “Neither of us could achieve on our own and having someone to bounce ideas off and share high-fives with as well as low moments is invaluable.” 

“I am more detail-oriented, whilst Hood is more people-focused. We have never really disagreed on direction. We have certainly disagreed on how we get there. But as we both want to head in the same direction … it is just about execution; we talk it through and generally come to a hybrid solution.” 

Mr Hood agrees that from the very beginning the two have been completely aligned on their long-term vision and clear and open communication.  

“There are no stupid questions, any annoyances or thoughts can be spoken about openly and no comments are taken in any other means than business only,” he says. 

“We also never look back – a decision made is a final decision and we never say, ‘I told you we should have gone the other way.’ At the point the decision is made it is a joint decision and that’s final. 

“We are still highly driven and motivated people, but the way in which we get to decisions are different. 

“Davison will take a more facts and details-oriented path to get to his decision whereas I will take a more people-and-impact path to get to mine, so when presented we both attack outcomes and consequences in a much more rounded way.

 “In recent times we have had a CFO join us (Mason Dunn) who has been the perfect balance to our differences and when we can’t agree on the next steps, he has been the voice of reason to sway these decisions one way or another.” 

Despite their success — or maybe because of it — the pair consider paying it forward important and both are involved in mentoring young, up-and-coming entrepreneurs. 

“It is important to give back as many people have helped us during our journey,” says Mr Davison. “You learn an incredible amount which forces you to articulate your thoughts…”

 Mr Hood says entrepreneurship at its core can’t be taught but more importantly, entrepreneurs themselves can’t be taught in a traditional sense of the word. 

“They are just sponges who want to be exposed to as much information and options as they can be so that they can make their own impact on the world.” 

“When I was growing up there were no options for this learning style and school and university wasn’t interesting for me, so I strongly support helping build avenues for mentorship to occur and it’s something I definitely want to continue.”

And the privilege of helping others has it owns rewards.

“It’s not about learning at this level, but this isn’t to say that you still don’t learn from cool ideas,” he says. “It is about giving back and providing a forum for the young entrepreneurs to pitch their ideas and thoughts to like-minded people who don’t respond with a ‘that’s not how our industry does it’ type answer and embraces what others might consider ‘crazy or radical’ concepts.”

Just as they are inspiring the next generation of start-ups, both have been inspired by others who pushed the boundaries before them.

“Warren Buffet inspires me,” says Mr Davison. “Yes, he is rich, but I love his patience and persistence. He takes a long-term approach and takes one step at a time to get there — no shortcuts — [he] just makes a plan and does it.”

“Entrepreneurs inspire me,” says Mr Hood. “People who have created sustainable businesses from scratch. I couldn’t pick just one. I love hearing all of their stories and the barriers they overcame in order to get there.”

And the lesson he’s taken away from those stories is that success requires passion.

“If you are going into business then make sure it is something you are passionate about and don’t do it for the money,” he says. “Money comes and goes in business and if you are only there for the financial rewards then you will very quickly hit roadblocks and burn out. If you are doing something for the enjoyment of it, you will dig deep and find the extra energy when you need it to get through the tough times and come out the other end. It is the tough markets where great entrepreneurs make the biggest difference to the business.”